Starton’s strategic platform focuses on
developing proprietary continuous delivery technology to achieve
transformative patient outcomes and decrease costs in the
healthcare system
Combined company will have an estimated
post-transaction enterprise value of $339 million and equity value
of $374 million, assuming a share price at closing of $10.15
$50 million in targeted net proceeds from the
transaction, consisting of cash held in trust and expected PIPE
capital raise, to fund required capital for future clinical
trials
Following completion of the business
combination, which is anticipated during the second half of 2023,
shares of Starton are expected to trade on the Nasdaq
Starton Therapeutics, Inc. (“Starton” or “the Company”), a
clinical-stage biotechnology company focused on transforming
standard-of-care therapies with proprietary continuous delivery
technology, and Healthwell Acquisition Corp. I (Nasdaq: HWEL)
(“Healthwell”), a special purpose acquisition company, today
announced that they have entered into a definitive business
combination agreement (the “Business Combination Agreement”)
pursuant to which, among other things, HWEL Holdings Corp., a newly
formed wholly-owned subsidiary of Healthwell (“Pubco”), has agreed
to acquire Starton and become a publicly traded company (the
“Transaction”). Upon the closing of the Transaction, which is
expected to occur during the second half of 2023, Pubco will be
renamed Starton Holdings Corp., and each share of common stock and
warrant of Healthwell will be exchanged, on a one-for-one basis,
for shares of common stock and warrants of Pubco. After the
consummation of the Transaction, the common stock and warrants of
Pubco are expected to be listed on the Nasdaq and Starton and
Healthwell will each become wholly-owned subsidiaries of Pubco.
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Starton is transforming standard-of-care therapies with
proprietary continuous delivery technology that can increase the
efficacy of approved drugs, make them more tolerable and expand
their potential use. The Company’s technology has two programs in
the clinic and three pre-clinical programs. STAR-LLD, its lead
program, targets multiple myeloma (“MM”) and chronic lymphocytic
leukemia (“CLL”), and other hematologic cancers whose treatments
expand and improve on the current uses of lenalidomide in both
efficacy and tolerability. Lenalidomide can reduce the quality of
life for patients, leading to dose reductions and discontinuation.
Starton’s technology aims to provide continuous delivery treatment
so cancer patients can live better, longer.
Starton’s established leadership team, led by Chairman, Chief
Executive Officer and Co-Founder Pedro Lichtinger, is supported by
renowned scientific committee members, including Mohamad Hussein,
MD, who practiced at the Cleveland Clinic Foundation for two
decades and is former VP, Global Multiple Myeloma Franchise at
Celgene and current Professor of Medicine and Oncology at the
University of South Florida; Kenneth Anderson, MD, Kraft Family
Professor of Medicine at Harvard Medical School and Director of the
LeBow Institute for Myeloma Therapeutics and Jerome Lipper Multiple
Myeloma Center at Dana-Farber Cancer Institute; and Asher
Chanan-Khan, MD, Professor of Medicine and former Co-Chairman,
Hematologic Malignancies Program, Mayo Clinic Cancer Center.
“MM and CLL are the most common blood cancers in the U.S. and
are rarely curable. While treatments extend survival for an average
of three to 10 years, deteriorating quality of life remains a
challenge due to drug-related side effects. At Starton, we are
developing an approach that minimizes the serious side effects
patients experience by unlocking the full potential of approved
drugs,” said Lichtinger. “Our combination with Healthwell will
enable us to extend our runway and expedite the development of
therapies using our proprietary continuous delivery technology to
meaningfully improve patient outcomes. We look forward to working
with the Healthwell team, who will add substantial value to the
future of our company.”
“We are pleased to combine with Starton, whose innovations not
only transform lives, but also drive costs out of the healthcare
system,” said Alyssa Rapp, CEO of Healthwell. “Starton’s
experienced leadership team and impressive group of scientific
advisors give the Company a competitive edge. We’re confident that
Pedro’s track record of sophistication and deep expertise in drug
development will help the Company achieve its goals. At Healthwell,
we look forward to supporting the Company with an expansive
network, operational expertise and public market experience to help
accelerate its timeline and ability to deliver value for patients,
partners and shareholders.”
Dr. Hussein added, “We are excited to continue advancing the
work that the entire Starton team has undertaken to improve the use
of lenalidomide in MM and CLL for the benefit of patients through
its continuous delivery technology. The combination with Healthwell
will significantly accelerate Starton’s priorities and allow the
Company to conduct programs in parallel to unlock value in multiple
indications so as to deliver the transformative potential of its
strategic platform to drive significant improvements to the
treatment of cancer."
Proceeds from the business combination are expected to be used,
among other things, to support Starton’s research and clinical
development programs, including:
- STAR-LLD in MM is in development
for new MM indications in intolerant patients and achievement of
superiority versus oral lenalidomide in maintenance treatment of
MM. The STAR-LLD delivery system is expected to expand use
following discontinuations, dose reductions and treatment by
reducing area under the curve (AUC) by more than 50% and a 90%
lower CMax. STAR-LLD is in development in two continuous delivery
systems: subcutaneous and transdermal.
- STAR-LLD in CLL is being developed
in multiple indications to establish the only immunomodulatory drug
(IMiD) approved for CLL. STAR-LLD is in development in two
continuous delivery systems: subcutaneous and transdermal.
- STAR-OLZ in chemotherapy-induced nausea
and vomiting (CINV) is a 5-day transdermal patch in
development for CINV and will be the first product to be evaluated
for total control, becoming the first product with a no-nausea
primary indication.
Investment Highlights
- Enhanced proprietary delivery system leveraging proven
continuous delivery technology across a wide range of
indications.
- Blockbuster potential with a groundbreaking approach to
treating multiple myeloma and other hematological
malignancies.
- Superior PK/PD (pharmacokinetic/pharmacodynamic) profile versus
the current standard-of-care, leading to improved drug tolerability
and superior patient outcomes.
- Significant opportunity to expand the total addressable market
by capturing Revlimid intolerant patients.
- De-risked opportunity by leveraging FDA-approved blockbuster
products with proven active ingredients.
- Strong cadence of upcoming catalysts with defined pathway into
clinic and a clear path forward to potential approval.
- Substantial expansion opportunities with the potential to
leverage the existing technology in other approved blockbuster
molecules.
Key Transaction Terms
Pursuant to the Business Combination Agreement, Pubco will
acquire Starton for aggregate base consideration of $260 million,
including $20 million of incentive shares provided to potential
PIPE investors, subject to adjustments for debt (net of cash) and
certain other adjustments, which consideration shall be payable in
shares of Pubco common stock, or shares of a newly created Canadian
subsidiary of Pubco (“Exchangeable Shares”) that will be issued to
certain eligible holders on a tax-deferred basis and which will be
exchangeable, on a one-for-one basis into shares of Pubco, with
each share valued at the price at which Healthwell redeems its
public stockholders at the business combination. Under the Business
Combination Agreement, Pubco will also assume all of the
outstanding stock options of Starton. In addition, all of the
issued and outstanding common stock and warrants of Healthwell will
be exchanged for substantially equivalent shares of common stock
and warrants of Pubco.
In addition to the base consideration, existing Starton
shareholders will have the right to receive contingent earnout
consideration in the form of up to 25 million shares of Pubco
common stock or Exchangeable Shares, as applicable, payable in
three tranches of at least 8.3 million shares, with a tranche
earned upon the post-closing Pubco stock price reaching at least
$12 for 20 trading days, $14 for 20 trading days or upon
achievement of a first clinical milestone (completion of Phase 1b
for multiple myeloma), and the Pubco stock price reaching at least
$16 for 20 trading days or upon achievement of the successful
completion of an FDA required bridging study in healthy volunteers
that proves bio-equivalence between the ambulatory subcutaneous
pump and either a transdermal patch or an on body subcutaneous
pump.
Assuming a HWEL share price of $10.15 and redemptions of 86% of
HWEL’s publicly held shares, Starton is expected to have a pro
forma enterprise value of $339 million and equity value of $374
million.
HWEL currently has approximately $250 million held in short term
U.S. Treasuries in a trust account at JPMorgan Chase Trust. The
transaction is expected to bring gross cash proceeds of $50
million, including $35 million in cash expected to be held in trust
(assuming 86% redemptions), and $15 million in an anticipated
private investment in public equity (PIPE) capital raise.
The Transaction is expected to close in the second half of 2023
and is subject to shareholder approval (as described below), as
well as other customary conditions, including receipt of the
approval of the British Columbia Court and certain regulatory
approvals.
Board and Shareholder Approval
The Business Combination Agreement was approved by the board of
directors of each of Starton and the Purchaser, and each recommends
that its respective shareholders approve the Transactions. Each of
the directors and officers, as well as certain of the shareholders
of Starton and the Purchaser have agreed to vote the shares held by
them in favor of the Transaction pursuant to voting support
agreements, subject to customary exceptions. The shares represented
by the parties to the voting support agreements represent
approximately 46% of the votes of all of the shares of Starton and
approximately 20% of the votes of all of the shares of the
Purchaser.
Shareholders of Starton and the Purchaser will be asked to
approve the Transaction at meetings of Starton and the Purchaser,
expected to be held in the second half of 2023. In connection with
such meetings, Starton and the Purchaser will prepare, file and
mail proxy statements that will include details regarding the
Transaction and the approvals required.
Advisors
SPAC Advisory Partners LLC, a division of Kingswood Capital
Partners, is serving as exclusive financial advisor and Fox
Rothschild and Dentons Canada LLP are acting as legal counsel to
Starton. Jefferies LLC is serving as capital markets advisor to
Healthwell and is being represented by Kirkland & Ellis LLP.
Ellenoff Grossman & Schole LLP and Peterson McVicar LLP are
serving as legal counsel to Healthwell.
Management Presentation
The management teams of Starton and Healthwell will host an
investor call on April 27, 2023 at 8:00 am ET to discuss the
proposed business combination and review an investor presentation.
The webcast can be accessed by visiting:
https://events.q4inc.com/attendee/949775212. A replay will be
available.
For materials and information, visit https://www.startontx.com/
for Starton and https://healthwellspac.com/ for Healthwell.
Healthwell will also file the presentation with the SEC as an
exhibit to a Current Report on Form 8-K, which can be viewed on the
SEC’s website at www.sec.gov.
About Starton Therapeutics
Starton is a clinical-stage biotechnology company focused on
transforming standard-of-care therapies with proprietary continuous
delivery technology, so people with cancer can receive continuous
treatment to live better, longer. To learn more, visit startontx.com.
About Healthwell
Healthwell is a blank check company, also commonly referred to
as a special purpose acquisition company, or SPAC, formed for the
purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with
one or more businesses or entities.
Additional Information and Where to Find It
In connection with the proposed transaction (the “Proposed
Transaction”), a newly formed parent company (“Pubco”) intends to
file a registration statement on Form S-4 (as may be amended or
supplemented from time to time, the “Registration Statement”) with
the U.S. Securities and Exchange Commission (the “SEC”), which will
include a preliminary proxy statement and a prospectus in
connection with the Proposed Transaction. STOCKHOLDERS OF
HEALTHWELL ACQUISITION CORP. I (“HEALTHWELL”) ARE ADVISED TO READ,
WHEN AVAILABLE, THE PRELIMINARY PROXY STATEMENT, ANY AMENDMENTS
THERETO, THE DEFINITIVE PROXY STATEMENT, THE PROSPECTUS AND ALL
OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC
IN CONNECTION WITH THE PROPOSED TRANSACTION AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. THIS
DOCUMENT WILL NOT CONTAIN ALL THE INFORMATION THAT SHOULD BE
CONSIDERED CONCERNING THE PROPOSED TRANSACTION. IT IS ALSO NOT
INTENDED TO FORM THE BASIS OF ANY INVESTMENT DECISION OR ANY OTHER
DECISION IN RESPECT OF THE PROPOSED TRANSACTION. When available,
the definitive proxy statement and other relevant documents will be
mailed to the stockholders of Healthwell as of a record date to be
established for voting on the Proposed Transaction. Stockholders
and other interested persons will also be able to obtain copies of
the preliminary proxy statement, the definitive proxy statement,
the Registration Statement and other documents filed the SEC that
will be incorporated by reference therein, without charge, once
available, at the SEC’s website at www.sec.gov. Healthwell’s
stockholders will also be able to obtain a copy of such documents,
without charge, by directing a request to: Healthwell Acquisition
Corp., 1001 Green Bay Rd, #227 Winnetka, IL 60093; e-mail:
healthwell.management@healthwellspac.com.
Forward-Looking Statements
This communication contains forward-looking statements for
purposes of the “safe harbor” provisions under the United States
Private Securities Litigation Reform Act of 1995. Any statements
other than statements of historical fact contained herein are
forward-looking statements. Such forward-looking statements
include, but are not limited to, expectations, hopes, beliefs,
intentions, plans, prospects, financial results or strategies
regarding Starton Therapeutics, Inc. (“Starton”) and the Proposed
Transaction and the future held by the respective management teams
of Healthwell or Starton, the anticipated benefits and the
anticipated timing of the Proposed Transaction, future financial
condition and performance of Starton and expected financial impacts
of the Proposed Transaction (including future revenue, pro forma
enterprise value and cash balance), the satisfaction of closing
conditions to the Proposed Transaction, financing transactions, if
any, related to the Proposed Transaction, the level of redemptions
of Healthwell’s public stockholders and the products and markets
and expected future performance and market opportunities of
Starton. These forward-looking statements generally are identified
by the words “anticipate,” “believe,” “could,” “expect,”
“estimate,” “future,” “intend,” “may,” “might,” “strategy,”
“opportunity,” “plan,” “project,” “possible,” “potential,”
“project,” “predict,” “scales,” “representative of,” “valuation,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions, but the absence of these words
does not mean that a statement is not forward-looking.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this
communication, including, without limitation: (i) the risk that the
Proposed Transaction may not be completed in a timely manner or at
all, which may adversely affect the price of Healthwell’s
securities; (ii) the risk that the Proposed Transaction may not be
completed by Healthwell’s business combination deadline and the
potential failure to obtain an extension of the business
combination deadline if sought by Healthwell; (iii) the failure to
satisfy the conditions to the consummation of the Proposed
Transaction, including, among others, the condition that Healthwell
has cash or cash equivalents of at least $15 million, and the
requirement that the definitive agreement related to the Proposed
Transaction (the “Merger Agreement”) and the transactions
contemplated thereby be approved by the stockholders of each of
Healthwell and Starton; (iv) the failure to obtain any applicable
regulatory approvals required to consummate the Proposed
Transaction; (v) the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger
Agreement; (vi) the effect of the announcement or pendency of the
Proposed Transaction on Starton’s business relationships, operating
results, and business generally; (vii) risks that the Proposed
Transaction disrupts current plans and operations of Starton;
(viii) the risk that Pubco may not be able to raise funds in a PIPE
financing or may not be able to raise as much as anticipated; (ix)
the outcome of any legal proceedings that may be instituted against
Starton or Healthwell related to the Merger Agreement or the
Proposed Transaction; (x) the ability to maintain the listing of
Healthwell’s securities on a national securities exchange or
failure of Pubco to meet initial listing standards in connection
with the consummation of the Proposed Transaction; (xi) uncertainty
regarding outcomes of Starton’s ongoing clinical trials,
particularly as they relate to regulatory review and potential
approval for its product candidates; (xii) risks associated with
Starton’s efforts to commercialize a product candidate; (xiii)
Starton’s ability to negotiate and enter into definitive agreements
for supply, sales, marketing, and/or distribution on favorable
terms, if at all; (xiv) the impact of competing product candidates
on Starton’s business; (xv) intellectual property-related claims;
and (xvi) Starton’s ability to attract and retain qualified
personnel; and (xvii) Starton’s ability to continue to source the
raw materials for its product candidates.
Prior Disclosures
Starton is aware that its CEO appeared on the television program
“Unicorn Hunters” on June 7, 2021. During that appearance, the CEO
made a number of representations as to Starton’s approach to
reformulating drug products to improve efficacy, tolerability and
patients’ quality of life. As part of these representations, the
CEO raised the specific example of Starton’s investigational
reformulation of Revlimid™. While Starton believes in the value of
its product, it understands that any clinical superiority claims
cannot be made absent specific findings from rigorous clinical
studies which Starton has not undertaken. The CEO’s comments on the
television program were not intended to suggest Starton has
conducted such studies; Starton does not have data to support these
specific representations and disclaims any representations or
purported representations by its CEO which either stated or implied
the contrary.
Trademarks and Tradenames
This communication includes trademarks of Starton, which are
protected under applicable intellectual property laws and are the
property of Starton or its subsidiaries. This communication also
includes other trademarks, trade names and service marks that are
the property of their respective owners. We do not intend our use
or display of other companies’ trade names, trademarks or service
marks to imply a relationship with, or endorsement or sponsorship
of us by, any other companies
Participants In the Solicitation
Healthwell, Starton, Pubco and their respective directors and
executive officers may be deemed participants in the solicitation
of proxies of Healthwell’s stockholders in connection with the
Proposed Transaction. Healthwell’s stockholders and other
interested persons may obtain more detailed information regarding
the names, affiliations, and interests of certain of Healthwell
executive officers and directors in the solicitation by reading
Healthwell’s final prospectus filed with the SEC on August 4, 2021
in connection with Healthwell’s IPO, Healthwell’s Annual Report on
Form 10-K for the year ended December 31, 2022 filed with the SEC
on March 3, 2023 and Healthwell’s other filings with the SEC. A
list of the names of such directors and executive officers and
information regarding their interests in the Proposed Transaction,
which may, in some cases, be different from those of stockholders
generally, will be set forth in the Registration Statement relating
to the Proposed Transaction when it becomes available. These
documents can be obtained free of charge from the source indicated
above.
No Offer or Solicitation
This communication shall not constitute a solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the Proposed Transaction. This communication shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any states or jurisdictions in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of such state or jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, or an exemption therefrom.
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Healthwell HealthwellSPAC@edelman.com
Starton Therapeutics Investors@startontx.com
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